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India’s CSR Mandate; a Big Step or False Start?

2015 is slated to be a big year for sustainability, with economic, social and environmental issues gaining increasing prominence on the global political stage.

But what role does India – an emerging economy experiencing rapid growth as well as a vast array of social and environmental challenges – play in this development?

Sustainability is under an important evolutionary phase in India. In part, it has been accredited to the increasing role India’s leading corporates (such as the TATA Group) are playing in promoting responsible business practices, on the entry of Gen-Y into the workforce (a generation who research shows as taking sustainability to heart) and on improved standards of education. Most recently, however, all eyes are looking towards (fairly) newly elected Prime Minister Narendra Modi as a crucible of change.

Under this new leadership, India has passed a ruling that dictates corporations to contribute 2% of their net profits to CSR initiatives, making India the first country in the world to mandate corporate social responsibility. The law will apply to all companies incorporated in India – be it domestic or foreign subsidiary – of a certain net worth, turnover and net profit band.

Based on estimates from the Economic Times of India, this means that about 8,000 companies will spend a combined total of up to Rs. 150 billion (US$2 billion) annually on CSR activities!

“Social Development” or Tokenism?

India’s high vulnerability and exposure to climate change could have catastrophic ecological, social and economic repercussions if not addressed.

Naturally – as with any change – the CSR Mandate has drawn a fair amount of criticism. For instance, NGOs and corporates alike have voiced the opinion that the law could potentially lead to forced philanthropy, ‘tick box’ behaviour and tokenism, distracting business leaders who are looking to strategically incorporate sustainability into their operations from embracing it in a holistic way. Additionally, questions have also been raised on how India is going to ensure the mandate translates from prescription to practice.

However, what the mandate demonstrates is the growing social, political and economic realization that India – a country particularly vulnerable to global ecological variations – needs to tackle its ecological challenges now or bear the consequences. In 2014 Delhi was already ranked by the WHO as the world’s worst city in terms of air pollution – a reputation any nation would rather not have.

Though it sounds like legislation to be celebrated, is it enough? Will it stimulate concerted and collective efforts to educate and implement sustainability measures in the corporate world?

When people come together, magic happens

One way to bring companies’ Sales, Marketing, Corporate Communications and Sustainability departments together, demonstrate their commitment to responsible business and bring more value to the brand would be to integrate Sustainability in the events companies organise for their stakeholders – Channel Partner Meetings, Employee Events, Global/Regional Conferences and the like. It would involve educating, engaging and activating both internal and external stakeholders on sustainability issues material to the organisation and those which will affect the corporation’s future business strategies!

Point being – investing in Sustainable Events is not simply a way to fulfil mandatory CSR contributions, but is a strategic tool to build a business with a culture of care and responsibility that facilitate the transformation to a sustainable planet, just society and a growing economy.

In addition to promoting responsible business practices within an organisation, events also play a central role in facilitating conversation between various sectors regarding sustainability. Conferences such as the UN and Development Summits we will witness in this milestone year bring together thought leaders from business, civil society, social service, academia and the government – resulting in collaborations which, one day, may just save our lives!

This brings us back to our central question:

Will 2% make a difference?

The short answer is yes. However, it is too early to tell what the real impact will be because – as highlighted earlier – passing and implementing regulation are two very different things.

There are, however, other steps India can take to promote responsible and sustainable practices, both locally and on a global scale.

Capitalizing on the power of meetings and the synergy that can result from them, at the much anticipated United Nations Climate Change Conference 2015 India and all nations who have a stake in the sustainability of our planet (read: everyone) should push for a set of global goals – including increasing resource efficiency, reducing fossil fuel dependence and shifting to cleaner technologies – to be incorporated into national policies by all governments.

As the only nation in the world to mandate corporate contribution to CSR initiatives, India has demonstrated itself as a pioneer in sustainable development. However, for considerable global change to occur, our world’s leaders need to meet during these landmark events, abandon myopic views on development, and produce a clear, concrete and material plan to incorporate sustainable development into public and private policy – not simply because it’s ‘good to have’, but because it is an unavoidable and necessary step for our future.

The writers are Lalit Chadha and Pranav Sethaputra. Lalit is Director (Business Development India) and Pranav a Sustainability Consultant with leading global provider of engagement and activation solutions, MCI. You may follow Lalit on Twitter @lalit_chadha or email them at lalit.chadha@mci-group.com or pranav.sethaputra@mci-group.com